Chipmaker TowerJazz posts 8% rise in Q4 profit

TEL AVIV: Israeli chipmakerTowerJazz has forecast strong growth in 2016 after reporting a better than expected fourth-quarter profit, boosted by rising demand for sensors, power management products and wireless connectivity.

TowerJazz said on Wednesday it earned 70 cents a share in the last three months of 2015, excluding one-off items, compared with 54 cents in the same period of 2014. Revenue rose 8% to a record $254.6 million.

The maker of chips for smartphones, battery chargers, AC/DC adapters and image sensors, was expected by analysts to report earnings of 63 cents a share on revenue of $252.4 million, according to Thomson Reuters Estimates.

Including one-off items, on a GAAP accounting basis, TowerJazz posted a basic EPS of 28 cents versus 1 cent a year ago.

TowerJazz lost money for years following heavy investments in a second chip plant in Israel, while also paying high interest on its debt. It has since slashed its debt while adding, through acquisitions and joint ventures, plants in Japan, California and San Antonio, Texas.

The company predicted it would generate revenue of $276 million in the current quarter, plus or minus 5%, equating to year-on-year growth of 22% and above analysts' average forecast of $256.4 million. Ellwanger expects revenue of over $1 billion in 2016.

This expected growth is partly attributed to the inclusion of revenue from its San Antonio plant in the beginning of February. TowerJazz acquired the plant from Maxim Integrated Products, which committed to buy chips from the plant for 15 years.

Ellwanger also attributed the growth to being "focused on the right sectors and having the right customers."

TowerJazz had growth of over 25% in its main markets -- camera sensors, power management and radio frequency (RF) wireless connectivity.

"Our product strategy surrounds the trends that drive the Internet of Things," Ellwanger said. "If you look at how much computing power is in a phone ... you have to have power efficiency, you have to have sensors."

He said about 20% of the company's end products go to the automotive sector as cars become increasingly connected. Its chips, for example, are used in sensors in collision avoidance systems.